Was being conservative there for sake of easy calculation. But if you want the specifics:
1. First thing first it is inflation not depreciation that makes up the loss of purchasing power. Depreciation is a process of allocation whereby the accumulated historical cost of an item of plant and equipment is apportioned and expensed over its estimated useful life.
2. The the average annual inflation rate in Australia the last 25 years is 2.8%.
3. When talking about "purchasing power" you need to take into account the same basket of goods the last 25 years.
You will now find that in Australia the same basket of goods cost roughly twice in nominal $ terms as it used to from 1998 to 2023; 25 years. Or in my words above; in 25 years you've lost 50% of purchasing power.... If you don't believe me have a play of the RBA calculator. https://www.rba.gov.au/calculator/annualDecimal.html
Enjoy... Hope you learnt something new about your money today.
Was being conservative there for sake of easy calculation. But...
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